Tax exemption does not excuse an organization from maintaining proper records and filing any required
annual or special-purpose tax returns, e.g., 26 U.S.C. § 6033 and 26 U.S.C. § 6050L. Prior to 2008, an annual return was not generally required from an exempt organization accruing less than $25,000 in gross income yearly.[11] Since 2008, most organizations whose annual gross receipts are less than $50,000 must file an annual information return known as Form 990-N.[12][f] Form 990-N must be submitted electronically using an authorized IRS e-file provider. Form 990, Form 990-EZ, and Form 990-PF may be filed either by mail or electronically through an authorized e-file provider.
Failure to file required returns such as Form 990 (Return of Organization Exempt From Income Tax) may result in fines of up to $250,000 per year. Exempt or political organizations, excluding churches or similar religious entities, must make their returns, reports, notices, and exempt applications available for public inspection. The organization's Form 990 (or similar such public record as the Form 990-EZ or Form 990- PF) must be available for public inspection and photocopying at the offices of the exempt organization, through a written request and payment for photocopies by mail from the exempt organization, or through a direct Form 4506-A "Request for Public Inspection or Copy or Political Organization IRS Form" request to the IRS of for the past three tax years. Form 4506-A also allows the public inspection or photocopying access to Form 1023 "Application for Recognition of Exemption" or Form 1024, Form 8871 "Political Organization Notice of Section 527 Status", and Form 8872 "Political Organization Report of Contribution and Expenditures". Internet access to many organizations' 990 and some other forms are available through GuideStar.[g] Certain organizations are exempt from filing Form 990, such as churches, their integrated auxiliaries, and conventions or associations of churches; the exclusively religious activities of any religious order; and religious organizations; and most organizations whose annual gross receipts are less than $5,000.[15] Failure to file such timely returns and to make other specific information available to the public also is prohibited.[16][17]
Between 2010 and 2017 the IRS revoked the nonprofit status of more than 760,000 nonprofit organizations for failing to file the 990 form.[18]
501(c)(3)
501(c)(3) tax-exemptions apply to entities that are organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes; or for testing for public safety, to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals. The 501(c)(3) exemption also applies for any unincorporated community chest, fund, cooperating association, or foundation that is organized and operated exclusively for those purposes.[19][20] There are also supporting organizations—often referred to in shorthand form as "Friends of" organizations.[21][22][23] [24][25] 26 U.S.C. § 170, provides a deduction, for federal income tax purposes, for some donors who make charitable contributions to most types of 501(c)(3) organizations, among others.
The IRS explains that to be tax-exempt, "an organization must be organized and operated exclusively for
exempt purposes ... and none of its earnings may inure to any private shareholder or individual."[26]
Private inurement means that the organization's assets must not unduly benefit a person.[27]
Organizations described in section 501(c)(3) are prohibited from conducting political campaign activities to intervene in elections to public office.[28] On the other hand, public charities (but not private foundations) may conduct a limited amount of lobbying to influence legislation. Although the law states that "No substantial part..." of a public charity's activities can go to lobbying, charities may register for a 501(h) election allowing them to lawfully conduct lobbying activities as long as their financial expenditure does not exceed a specified amount.[29] 501(c)(3) organizations risk loss of tax exempt status if any of these rules are violated.[30][31]
A 501(c)(3) organization is allowed to conduct some or all of its charitable activities outside the United States.[32][33] Donors' contributions to a 501(c)(3) organization are tax-deductible only if the contribution is for the use of the 501(c)(3) organization, and that the 501(c)(3) organization is not merely serving as an agent or conduit of a foreign charitable organization.[34] Additional procedures are required of 501(c)(3) organizations that are private foundations.[33][35]
501(c)(4)
A 501(c)(4) organization is a social welfare organization, such as a civic organization or a neighborhood association. An organization is considered by the IRS to be operated exclusively for the promotion of social welfare if it is primarily engaged in promoting the common good and general welfare of the people of the community.[36][37] Net earnings must be exclusively used for charitable, educational, or recreational purposes.[38]
According to The Washington Post, 501(c)(4) organizations:[39]
...are allowed to participate in politics, so long as politics do not become their primary focus. What that means in practice is that they must spend less than 50 percent of their money on politics. So long as they don't run afoul of that threshold, the groups can influence elections, which they typically do through advertising.
Allowed activities
501(c)(4)s are similar to 501(c)(5)s and 501(c)(6)s in that the organizations may inform the public on controversial subjects and attempt to influence legislation relevant to its program.[40] Unlike 501(c)(3) organizations, they may also participate in political campaigns and elections, as long as their primary activity is the promotion of social welfare and related to the organization's purpose.[41][42]
The income tax exemption for 501(c)(4) organizations applies to most of their operations, but income spent on political activities—generally the advocacy of a particular candidate in an election—is taxable. [43] An "action" organization generally qualifies as a 501(c)(4) organization.[44] An "action" organization is one whose activities substantially include, or are exclusively,[45] direct or grassroots lobbying related to advocacy for or against legislation or proposing, supporting, or opposing legislation that is related to its purpose.[46]
A 501(c)(4) organization may directly or indirectly support or oppose a candidate for public office as long as such activities are not a substantial amount of its activities.[36][47]
A 501(c)(4) organization that lobbies must register with the Clerk of the House if it lobbies members of the House or their staff.[42] Likewise, a 501(c)4 organization must register with the Secretary of the Senate if it lobbies members of the Senate or their staff.[42] In addition, the 501(c)(4) organization must either inform its members the amount it spends on lobbying or pay a proxy tax to the Internal Revenue Service.[42] Lobbying expenses and political expenses are not deductible as business expenses.[42]
Electioneering communications
The use of 501(c)(4), 501(c)(5), and 501(c)(6) organizations has been affected by the 2007 case FEC v. Wisconsin Right to Life, Inc., in which the Supreme Court struck down the part of the McCain-Feingold Act that prohibited 501(c)(4)s, 501(c)(5)s, and 501(c)(6)s from broadcasting electioneering communications. The Act defined an electioneering communication as a communication that mentions a candidate's name 60 days before a primary or 30 days before a general election.
Contributions
Contributions to 501(c)(4) organizations are not tax-deductible as charitable donations unless the organization is either a volunteer fire department or a veterans organization.[48][49] Dues or contributions to 501(c)(4) organizations may be deductible as a business expense under IRC 162, although amounts paid for intervention or participation in any political campaign, direct lobbying, grass roots lobbying, and contact with certain federal officials are not deductible.[50] If a 501(c)4 engages in a substantial number of these activities, then only the amount of dues or contributions that can be attributed to other activities may be deductible as a business expense.[51]
The organization must provide a notice to its members containing a reasonable estimate of the amount related to lobbying and political campaign expenditures, or else it is subject to a proxy tax on its lobbying and political campaign expenditures. It must also state that contributions to the organization are not deductible as charitable contributions during fundraising.[50]
A 501(c)(4) organization is not required to disclose their donors publicly,[52] with the exception of organizations that make independent expenditures as of 2018.[53][54][55][56] The former complete lack of disclosure led to extensive use of the 501(c)(4) provisions for organizations that are actively involved in lobbying, and has become controversial.[57][58] Criticized as "dark money", spending from these organizations on political advertisements has exceeded spending from Super PACs.[59][60] Spending by organizations that do not disclose their donors increased from less than $5.2 million in 2006 to well over $300 million during the 2012 election season.[61]
Every organization, including a 501(c)(4) organization, that expressly advocates for the election or defeat of a particular political candidate and spends more than $250 during a calendar year must disclose the name of each person who contributed more than $200 during the calendar year to the Federal Election Commission.[53][55] The Federal Election Commission is required to enforce this provision based on a federal court decision in 2018.[54][56][55]
History
The origins of 501(c)(4) organizations date back to the Revenue Act of 1913, which created a new group of tax-exempt organizations dedicated to social welfare in a precursor to what is now Internal Revenue Code Section 501(c)(4).[62]
The Protecting Americans from Tax Hikes Act of 2015 introduced a new requirement on 501(c)(4) organizations.[63] Within 60 days of the organization's formation, a 501(c)(4) organization is required to file Form 8976 with the Internal Revenue Service as notification that it is operating as a section 501(c)(4) organization.[64][65] The Internal Revenue Service will acknowledge receipt of the notification, but the acknowledgment is not a determination that the organization qualifies for section 501(c)(4) tax-exempt status.[65] A 501(c)(4) organization is not required to send the notification if the organization was formed on or before July 8, 2016, and it either applied for a determination letter using Form 1024 or filed a Form 990 between December 19, 2015, and July 8, 2016.[65]
As of January 2018, the application for recognition of exemption as a 501(c)(4) organization is a new form, Form 1024-A, rather than Form 1024.[66][67]
Between 2010 and 2017, the number of 501(c)(4) organizations dropped from almost 140,000 to fewer than 82,000.[68] In 2017 revocations of 501(c)(4) groups comprised 58% which usually is only 15% of the total nonprofits which have their tax status revoked by the IRS for their failure to file Form 990.
501(c)(5)
A 501(c)(5) organization is a labor organization, an agricultural organization, or a horticultural organization. Labor unions, county fairs, and flower societies are examples of these types of groups. Labor union organizations were a primary benefactor of this organization type, dating to the 19th century. According to the Internal Revenue Service, a 501(c)(5) organization has a duty of providing service to its members first. The organization's benefits may not inure to a specific member, but the rules for inurement vary among the three different types of organizations under this segment. A 501(c) (5) organization can make unlimited corporate, individual, or union contributions.[69]
A labor organization may pay benefits to its members because paying benefits improves all members' shared working conditions. An agricultural organization can provide financial assistance to its members in order to improve the conditions of those engaged in agricultural pursuits generally. Members can benefit in incidental ways from the organization's exempt activities as long as the benefits are available to all persons.[69]
History
The first exemption for labor organizations from corporate income tax was enacted as part of the Payne–Aldrich Tariff Act of 1909.[70][71]
The Revenue Act of 1913 excluded "labor, agricultural, or horticultural organizations" from income tax liability.[71][72]
Contributions and activities
Much like 501(c)(4) and 501(c)(6) organizations, 501(c)(5) organizations may also perform some political activities.[73] 501(c)(5) organizations are allowed to attempt to influence legislation that is related to the common union interests of its members.[74]
501(c)(5) organizations can receive unlimited contributions from corporations, individuals, and labor unions. The names and addresses of contributors are not required to be made available for public inspection.[75] All other information, including the amount of contributions, the description of noncash contributions, and any other information, is required to be made available for public inspection unless it clearly identifies the contributor.
A union membership dues paid to a 501(c)(5) organization are generally an ordinary and necessary business expense.[76] The membership dues are tax-deductible in full unless a substantial part of the 501(c)(5) organization's activities consists of political activity, in which case a tax deduction is allowed only for the portion of membership dues that are for other activities.[76]
Because associations involved in fishing and seafood harvesting were having difficulties qualifying for reduced postal rates,[77] in 1976 Congress established Internal Revenue Code Section 501(5) to define "agriculture" as the art or science of cultivating land, harvesting crops or aquatic resources, or raising livestock.[71]
Every organization, including a 501(c)(5) organization, that expressly advocates for the election or defeat of a particular political candidate and spends more than $250 during a calendar year must disclose the name of each person who contributed more than $200 during the calendar year to the Federal Election Commission.[53][55] The Federal Election Commission is required to enforce this provision based on a federal court decision in 2018.[54][56][55]
501(c)(6)
A 501(c)(6) organization is a business league, a chamber of commerce like the U.S. Chamber of Commerce, a real estate board, a board of trade, a professional football league or an organization like the Edison Electric Institute and the Security Industry Association, that are not organized for profit and no part of the net earnings goes to the benefit of any private shareholder or individual.[78]
Qualifications for exemption
A business league may qualify if it is an association of persons having a common business interest, whose purpose is to promote the common business interest and whose activities improve business conditions rather than actually conduct the business itself.[79] Members of the organization must be of the same trade, business, occupation, or profession in order to qualify.[80] A chamber of commerce or board of trade could qualify for similar reasons except that they may promote the common economic interests of all the commercial enterprises in a given trade or community.[81]
An association would not qualify if its principal activities consist of securing benefits and performing particular services for members.[82]
An association that promotes the common interests of certain hobbyists would not qualify because the Internal Revenue Service does not consider hobbies to be activities conducted as businesses.[83]
An organization whose primary activity is advertising the products or services of its members does not qualify because the organization is performing a service for its members rather than promoting common interests.[84][85] If an organization's primary activity is advertising the products or services of its members' industry as a whole, however, the organization will generally qualify if it also performs other services for its members.[86]
Contributions and activities
Much like 501(c)(4) and 501(c)(5) organizations, 501(c)(6) organizations may also perform some political activities.[73] 501(c)(6) organizations are allowed to attempt to influence legislation that is related to the common business interests of its members.[74]
A 501(c)(6) organization may receive unlimited contributions from corporations, individuals, and labor unions. The names and addresses of contributors are not required to be made available for public inspection,[75] with the exception of a 501(c)(6) organization that makes independent expenditures.[53][54][55][56] All other information, including the amount of contributions, the description of non-cash contributions, and any other information, is required to be made available for public inspection unless it clearly identifies the contributor. The U.S. Chamber of Commerce is a large political spender, and Freedom Partners used its status as a 501(c)(6) organization to raise and
distribute over $250 million during the 2012 election campaigns without disclosing its donors.[87] The group's existence was not publicly known until nearly a year after the election.
A business's membership dues paid to a 501(c)(6) organization are generally an ordinary and necessary business expense.[76] The membership dues are tax-deductible in full unless a substantial part of the 501(c)(6) organization's activities consists of political activity, in which case a tax deduction is allowed only for the portion of membership dues that are for other activities.[76]
Every organization, including a 501(c)(6) organization, that expressly advocates for the election or defeat of a particular political candidate and spends more than $250 during a calendar year must disclose the name of each person who contributed more than $200 during the calendar year to the Federal Election Commission.[53][55] The Federal Election Commission is required to enforce this provision based on a federal court decision in 2018.[54][56][55]
History
The predecessor of IRC 501(c)(6) was enacted as part of the Revenue Act of 1913[88] likely due to a U.S. Chamber of Commerce request for an exemption for nonprofit "civic" and "commercial" organizations, which resulted in IRC 501(c)(4) for nonprofit "civic" organizations and IRC 501(c)(6) for nonprofit "commercially-oriented" organizations.[78] The Revenue Act of 1928 amended the statute to include real estate boards.[89] In 1966, professional football leagues were added to the described organizations.[90]
The Revenue Act of 1913 related to professional football leagues had both antitrust and tax provisions: The antitrust provision was enacted to permit the merger of the National and American Football Leagues to go forward without fear of an antitrust challenge under either the 1914 Clayton Antitrust Act or the 1914 Federal Trade Commission Act.[91] IRC 501(c)(6) amendment was enacted in 1966 to ensure that a professional football league's exemption would not be jeopardized because it administered a players' pension fund.[92] Additionally, a professional sports league's exemption is
not to be jeopardized because its primary source of revenue is the sale of television broadcasting rights to its games because the broadcasting of games increases public awareness of the sport.[93] [94]
In 2013, Senator Tom Coburn introduced legislation to disallow a tax exemption for the National Football League, the Professional Golfers' Association, and other professional sports organizations. [95][96] Coburn estimated the tax exemption cost $100 million, but he said he could not get other members of Congress to support the legislation.[95][96]
501(c)(7)
A 501(c)(7) organization is a social or recreational club that is organized for pleasure, recreation, and other nonprofitable purposes.[97] Members must share interests and have a common goal directed toward pleasure and recreation, and the organization must provide opportunities for personal contact among members.[98][99] The organization's facilities and services must be open to its members and their guests only.[100] The organization must be a club of individuals, and no individual may derive profit from the organization's net earnings.[101] Examples include college alumni
associations; college fraternities or college sororities operating chapter houses for students; country clubs; amateur sport clubs; supper clubs that provide a meeting place, library, and dining room for members; hobby clubs; and garden clubs.[102]
Activities
A substantial amount of the 501(c)(7) organization's activities must be related to social and recreational activities for its members.[103] No more than 35 percent of its gross receipts may derive from non-members, and no more than 15 percent of its gross receipts is permitted to come from use of its facilities or services by the general public.[97] An organization that exceeds these limits may lose its 501(c)(7) status.[104]
When a group of eight or fewer individuals, at least one of whom is a member, uses the organization's facilities and the member pays for the other individuals, the Internal Revenue Service will assume the nonmembers are the guests of the member, and the revenue is deemed to be derived from the member.[101] Similarly, if at least 75 percent of a group using club facilities are members of the organization, the Internal Revenue Service will assume the nonmembers are the guests of the member, and the revenue is deemed to be derived from the member.[101] It is the responsibility of
the organization to maintain these records.[104] If the organization does not keep sufficient records to link revenue to a member, the Internal Revenue Service assumes the revenue came from a nonmember.[105]
The organization is subject to unrelated business income tax for the revenue derived from nonmember use of its facilities and services, less allowable deductions.[104] If the organization sells assets that were previously used for recreational or social purposes, the proceeds are considered related business income as long as the proceeds are reinvested in the organization.[106] Public use of the organization's facilities must be minimal, generally either less than $2,500 per year or less than five percent of its total gross receipts from normal and usual activities of the club.[104]
A 501(c)(7) organization cannot have a written policy of discriminating on the basis of race, color, or religion.[101][107] Nevertheless, a 501(c)(7) organization is permitted to limit its members to a particular religion in order to further the teachings of that religion.[101] An auxiliary of a 501(c)(8) fraternal benefit society that limits membership to members of a particular religion is allowed to do so as well.[101] Having written policies that limit its membership by ethnic origin and gender would not jeopardize the organization's tax-exempt status.[101][104]
History
The predecessor of Internal Revenue Code Section 501(c)(7) was part of the Revenue Act of 1913, which provides a tax-exemption to "fraternal beneficiary societies, orders, or associations operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system".[88] Congress justified the tax-exemption with the reasoning that the members join to provide themselves with recreational or social organization without further tax consequences, similar as if they had paid for the benefits directly.[97] Tax-exemption was available for organizations operated exclusively for pleasure, recreation, and other nonprofitable purposes.[97]
In 1969, Congress passed a law stating that social and recreational clubs were permitted to engage in some unrelated business income, subject to income tax.[97]
501(c)(8)
A 501(c)(8) organization is a fraternal benefit society.[108]
Eligibility
The society must have members of a similar calling, recreation, or profession, or members who work together to accomplish a worthy goal.[109] The members have associated themselves in order to help each other and to promote the common cause.[109] The society must have written documentation of its eligibility standards for membership, classes of membership, a process of admission, and rights and privileges of members.[110]
The members must have a common bond, which may be based on religious beliefs, gender, occupation, ethnicity, or shared values.[111]
The society must have a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws.[108] The supreme governing body should be composed of delegates elected directly by members or intermediate assemblies.[108]
The society must offer benefits to members, which may include life insurance, medical insurance, scholarships, educational programs, travel opportunities, and discount programs.[111] Revenue generated from providing benefits to non-members must be insubstantial to the society and may be taxable as unrelated business income.[112]
Donations
An individual's donation to a fraternity is only a tax-deductible charitable contribution if the contribution "is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals."[113]
History
Fraternal benefit societies trace their lineage back through mutual benefit societies, friendly societies and eventually to medieval guilds.[114] Many fraternal benefit societies were founded to serve the needs of immigrants and other under-served groups[115] who shared common bonds of religion, ethnicity, gender, occupation or shared values.
Section 38 of the Payne–Aldrich Tariff Act of 1909 was the first law to provide a tax-exemption for fraternal beneficiary societies.[116] The tax-exemption was later codified as section 501(c)(8) with the Internal Revenue Code of 1954.[117]
501(c)(13)
A 501(c)(13) organization is a certain type of cemetery company.
Eligibility
There are two primary types of eligible cemetery companies. A mutual cemetery company must be either "owned by and operated exclusively for the benefit of its lot owners who hold such lots for bona fide burial purposes and not for the purpose of resale" or engages in the burial of impoverished people performing similar charitable activities.[118] A nonprofit cemetery corporation must be incorporated solely for the purpose of the burial or the cremation of bodies
and no part of its net earnings inures to the benefit of any private shareholder or individual.[118] Any net gain by the cemetery must be devoted to certain cemetery functions, such as the cemetery's operations, maintenance, and improvements; acquisition of cemetery property; and investment of the net gain in order to provide additional income for cemetery functions.[119] Net gains are not allowed to be distributed to individuals.[119]
The cemetery may restrict burials and cremations to a certain group of people, such as impoverished people, people adherent to a certain religion, or people who lived in a certain community, as long as it still serves a broad class of people and operates for public purposes, but a 501(c)(13) organization may not enforce overly restrictive restrictions.[119][120]
A perpetual care fund that is used by a profit-making cemetery to maintain cemetery properties and burial lots is not eligible under 501(c)(13).[121] On the other hand, a nonprofit organization may have a perpetual care fund without jeopardizing its exemption under Section 501(c)(13).[119]
A cemetery that owns or operates a morgue, whether on its own grounds or elsewhere, is not eligible under 501(c)(13) because the Internal Revenue Service does not consider mortuary services necessarily incident to burial purposes.[119][122] The provision of traditional burial services that directly support and maintain basic tenets and beliefs of a religion regarding burial of its members" may still be eligible under 501(c)(13).[123]
A cemetery that buries animals is not eligible under 501(c)(13).[124]
A cemetery company wishing to be recognized under Section 501(c)(13) needs to prepare and file Form 1024 with the Internal Revenue Service.[125]
Charitable contributions
Charitable contributions to a 501(c)(13) organization are tax-deductible to the donor.[126] Payments for perpetual care of a particular lot or a particular crypt are not considered tax- deductible charitable contributions.[127] Payments made as part of the purchase price of a burial lot or crypt are not considered tax-deductible charitable contributions, even if a portion of the payment is for the perpetual care of the entirety of the cemetery.[127] Bequests or gifts to a 501(c)(13) cemetery is not deductible for federal estate tax purposes or gift tax purposes.[128] [119]
History
Historically, cemeteries were exempt from local property taxes and excise taxes in most states because states generally considered cemeteries to be performing a recognized civic service.[119]
The Tariff Act of 1913 provided an exemption from federal income taxes for mutual cemetery companies that were organized and operated exclusively "for the benefit of their members".[119] In 1921, Congress extended the tax-exemption to cemetery companies that are not mutual and to cemetery companies that are not operated for profit as well as any corporation solely incorporated to operate a cemetery and whose net gains do not inure to any person.[119]
In 1970, Congress included crematorium in the definition of cemetery for the purposes of Section 501(c)(13).[119][129]
501(d) – Religious or apostolic organizations with the purpose of operating a religious community where the members live a communal life following the tenets and teachings of the organization. [130] The organization's property is owned by each of the individuals in the community but, upon leaving, a member cannot withdraw any of the community's assets.[130] The organization's income goes into a community treasury that is used to pay for the organization's operating expenses and supporting members and their families.[130][131][a]
501(e) – Cooperative hospital service organizations that are organized to provide services for multiple tax-exempt hospitals.[132]
501(f) – Cooperative service organizations of educational organizations that invest assets contributed by each of the organization's members.[133]
501(j) – Amateur sports organizations that either conduct national or international sporting competitions or develop amateur athletes for national or international sporting competitions. [134]
501(k) – Day care centers may qualify as tax-exempt under Section 501(k).[135][136][137] The day care center must provide child care away from their homes.[136] At least 85 percent of the children served must be cared for while their parent or guardian is either employed, seeking employment, or a full-time student.[138] Most of the day care center's funding must come from fees received for day care services.[138] The day care center must also provide child care services to the general public.[136] The tax exemption for certain day care centers was part of the Deficit
Reduction Act of 1984.[137]
501(n) – Charitable risk pools that pool insurable risks of its members, which are tax-exempt charities.[139]
521(a) – Farmers' cooperative associations that market its member farmers' products at market rates, make purchases at wholesale rates, and remit earnings to member farmers.[140][a]
527 – Political organizations that operate primarily to raise or spend money to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office,[141] such as political parties, political action committees, and Super PACs.
528 – Homeowner associations, condominium management associations, residential real estate management associations, and timeshare associations may elect to be exempt from income tax on their exempt-function income under Section 528.[142][143][144][145] Alternatively, some homeowner associations may qualify under Section 501(c)(4) instead.[142][145] A homeowner association that provides only social and recreational activities may qualify under Section 501(c) (7).[145]
529 – Qualified tuition plans operated by a state or educational institution.[146]
4947(a)(1) – Non-exempt charitable trusts that have exclusively charitable interests.[147]
4947(a)(2) – Split-interest trusts.[147]
115(1) – Entities that derived their income a public utility or the exercise of any essential governmental function and accruing to a state or municipality.[148]
115(2) – States and municipalities.[148]
892(a) – Foreign governments.[149][150]
892(b) – Public international organizations or international-organization preparatory commissions in which the Government of the United States participates.[149][150]
508c1A
We are a filing agency and can help you with the filing but we do file everyone in WA State because they know what it is and accepts it. Once registered in WA it is good in all 50 states. It may be a surprise to some that there are over 27 classifications of IRS nonprofit organizations. When people hear the word nonprofit, they typically assume that the organization is a 501c3.
Most have never heard of the 508c1A nonprofit alternative for churches, even if they have been in church or ministry for years. The 508c1A designation for churches is part of the Internal Revenue Code Section 26 and the organization that files under this designation is often referred to as a Faith-Based Organization or FBO. There are several benefits that the 508c1A nonprofit designation holds over the 501c3 nonprofit designation. The following is a listing of some of those benefits. Filing an application to become a 508c1A non-profit with the IRS is not required. There is no requirement to file Form 1023, which is required to become a 501c3. This eliminates the need for IRS approval of your application.
There is no annual income tax filing requirements, such as the required Form 990 salary disclosure as a 501c3, when you are a 508c1A. The church or ministry does not have any restrictions on speaking about politics as a 508c1A,
unlike the restrictions under a 501c3. A 508c1A financial records and Board meeting minutes are not subject to public scrutiny, unlike the 501c3 that is required to file their records with the IRS for the purpose of public scrutiny.
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. The five steps to becoming a 501(c)(3) are: Our Team assist you in choosing a Name first , a purpose, also complete a 45 page Professional business Vision plan (350.00) We file your paperwork with the IRS, comply with state and
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SECTION 2
We Expedite all papers quickly. We process also a Professional 45 page Business Plan to get Grants. Our Grant writers Plus Class fee is only $300.00 to get your team to write grants. We Provide Website designers , and have a
Fantastic Fundraiser for your Nonprofit to get SEED MONEY, WE PAY YOU WHEN YOU SEND US NEW CLIENTS. Once the process starts with your Business plan , websites , 501c3 filing there is expedited services consultations to ensure agreement and we have a 100% approval rate with a NO REFUNDS POLICY ON ALL PRODUCTS.
The recognition of your organization as a 501(c)(3) tax-exempt entity by the Internal Revenue Service (IRS) offers many advantages in helping your organization receive donations and establish credibility. Primarily, having an
active 501(c)(3) status allows donors to receive a tax deduction, provides grant funding eligibility for the nonprofit, potential tax exemption at both state and federal level. This is Why you want to call now GET CERTIFIED 1800
378 2654. Our Staff certifies in ALL States.
OUR TEAM HAS A 100% GURANTEED RATE YOU WILL GET THE TAX EXEMPTION STATUS APPROVED IN 45 DAYS AFTER WE FILE YOUR 501C3 PAPERWORK. You have a Heart DESIRE TO CHANGE THE WORLD, WELL THATS WHY OUR STAFF IS READY TO CERTIFY YOU AS A WORLD GLOBAL SERVER , BY PACKAGING YOU AS A 501C3 FOR CHURCHES AND COMMUNITIES.
One of the World Riches Billionaire Bill Gates said “I hope we find capacity there and that we make it available to all Nonprofits,” he said. Big-dollar philanthropists also have a role to play by providing the substantive capital nonprofit organizations need so that they have the capacity to take in everyday donations and put them directly to work, Bill Gates said Asked all Foundations to donate 3 to 5 % of their Income to 501c3s.This is why it Imperative you get your 501c3 Now. THE WEALTH TRANSFER IS HERE. OUR EXPERTS SINCE 1992 HAS A 100% APPROVAL RATE WITH IRS, PACKAGING COUNTLESS NEW NONPROFIT LEADERS, GET STARTED NOW. SIGN UP HERE OR CALL DIRECT 206 898 8685 NOW. PUT YOUR VISION AND FAITH TO WORK. Proverbs 13:22 After Billionaire Bill Gates stated this, he activated Millions to Create their OWN 501C3, This is the Major Reason you need to Call in Get your own 501c3, 1 800 378 2654. Get in the WEALTH TRANSFER TO SUPPORT YOUR COMMUNITY.
Why Start a Nonprofit
No one can CHANGE THE WHOLE WORLD, BUT YOU CAN SHIFT THE WORLD YOU LIVE IN!! DONT DELAY GET IT DONE TODAY ! CALL 206 898 8685 Starting a Nonprofit is the first Step to changing our communities , so many grants are available$$ Your own 501c3 will allows you to use your business talent, education and experience for the good of humanity. This kind of purpose-driven experience can yield intangible rewards that you may find
more valuable than any amount of wealth Shifting your Community City , Churches and Effecting Nations with Grant free finances received through Foundations. 501(c) is a subsection of the Internal Revenue Code (IRC)—or
what's often referred to as the tax code. Subsection 501(c) covers nonprofit organizations and tax law; specifically, it lists 12 types of organizations that are exempt from paying federal income tax. The third—501(c)(3)—includes
"corporations, funds, or foundations that operate for religious, charitable, scientific, literary, or educational purposes.
STUDY THE TOP 15 NATIONS NONPROFITS
They’re prescreened: they have a staff, issue RFPs, or otherwise indicate interest in receiving grant proposals. Some foundations are omitted, even though they award large grants, because they don’t accept unsolicited grant
proposals. We list up to forty foundations for each state.
FOUNDATION NAME TOTAL ANNUAL GIVING
Bill and Melinda Gates Foundation $4,280,463,865
Silicon Valley Community Foundation $1,894,973,634
The Susan Thompson Buffett Foundation $589,873,244
The Ford Foundation $556,032,905
Lilly Endowment, Inc. $511,724,077
Jewish Communal Fund $451,187,386
The Walton Family Foundation, Inc. $439,117,107
The William and Flora Hewlett Foundation $431,219,377
Foundation For The Carolinas $397,662,364
The Chicago Community Trust $357,097,627
W. K. Kellogg Foundation $342,983,784
The David and Lucile Packard Foundation $325,249,144
The Wells Fargo Foundation $314,784,071
The Andrew W. Mellon Foundation $302,078,167
The Robert Wood Johnson Foundation $292,906,381
Doctors Without Borders USA, Inc. $240,642,551
The Simons Foundation $232,372,215
The Rotary Foundation $229,733,478
The New York Community Trust $222,557,108
Tides Foundation $222,278,451
John D. and Catherine T. MacArthur Foundation $209,859,152
NOW YOU ARE CREATING YOUR VERY OWN COMPANY TO EFFECT THE NATIONS, LETS GET STARTED.
What Does 501(c)(3) Mean?
You have come to the right place! Our Staff Team GETS THE 501C3 DONE QUICKLY. OUR TRAINERS TRAIN YOU AS A NEW 501C3 LEADER/ENTREPRENEUR/PASTORS 1 800 378 2654 USA OFFICE NONPROFIT EXPERTS IS A GLOBAL OFFICE representing all states, provides the most experience and the best price in the country. We CREATE YOUR WEALTH SYSTEM TO BRING FUNDING TO YOUR COMMUNITY.
Our staff Team prepare all of the necessary documentation to secure your organization’s 501c3 tax exempt status from the Internal Revenue Service (IRS)in 48 hours your 45 page 1023 is done upload to IRS EXPEDITED QUICKLY TO APPROVE YOU FOR GRANTS and as a NATIONAL TAX EXEMPT ORGANIZATION. (LLC ALSO)The recognition of your organization as 501c3 tax exempt by the IRS offers numerous advantages, and is critical to help your organization get donations. The primary benefits of 501c3 status include tax deductions for all donors, grant money eligibility, discounts in major retailers, lower postage rates for 501c3 tax exempt organizations, and increased credibility among the public.
The 501c3 Status is essential for a non profit seeking donations and grants. Don’t put your organization at risk or lose donations by using inexperienced volunteers or companies to process your 501c3 tax exemption. Our Experts
since 1992 , has successful Certified and gotten countless 501c3 applications APPROVED. We Guaranteed approval!! Our staff also help with IRS questions, also help with State Tax Exemptions or Charity registration, plus follow up to complete your 990 for your Accounting after Approval, We then start on your Professional Business plan, Website as a 501c3 to land Grants.
A 501(c) organization is a nonprofit organization in the federal law of the United States according to Internal Revenue Code (26 U.S.C. § 501(c)) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 through 505 set out the requirements for obtaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and unions.
For example, a nonprofit organization may be tax-exempt under section 501(c) (3) if its primary activities are charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals. According to the IRS Publication 557, in the Organization Reference Chart section, the following is an exact list of 501(c) organization types and their corresponding descriptions.
Organization type Description501(c)(1) Corporations Organized Under Act of Congress, including Federal Credit Unions[3] and National Farm Loan Associations[4] 501(c)(2) Title-holding Corporations for Exempt Organizations[5]501(c)(3) Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organization501(c)(4) Civic Leagues, Social Welfare Organizations, and Local Associations of Employees 501(c)(5) Labor, Agricultural and Horticultural Organizations501(c)(6) Business Leagues, Chambers of Commerce, Real Estate Boards 501(c)(7) Social and Recreational Clubs 501(c)(8) Fraternal Beneficiary Societies and Associations ,501(c)(9) Voluntary Employee Beneficiary Associations,501(c)(10) Domestic Fraternal Societies and Associations501(c)(11) Teachers' Retirement Fund Associations501(c)(12) Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, and Like Organizations
501(c)(13) Cemetery Companies.501(c)(14) State-Chartered Credit Unions, Mutual Reserve Funds, 501(c)(15) Mutual Insurance Companies or Associations,501(c)(16) Cooperative Organizations to Finance Crop Operations,501(c)(17) Supplemental Unemployment Benefit Trusts
$$What comes with a 501C3 MILLION OF GRANTS$$
You have a Heart DESIRE TO CHANGE THE WORLD, WELL THATS WHY OUR STAFF IS READY TO CERTIFY YOU AS A WORLD GLOBAL SERVER , BY PACKAGING YOU AS A 501C3 FOR CHURCHES AND COMMUNITIES
OUR STAFF SPECIALIZES IN 501C3 COMMUNITY BASED AND CHURCH BASED 501c3s!
Key National References:
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Bishop Vandaz Madison - 1 318-623-6404 Louisiana Region
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Bishop Chris Milton COGIC Board of Elders-1 818- 299-4599 California Region
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Apostle Keith Miller - 1 941-587-2005 Florida Region
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Pastor Doyra Gaines- 1 256-797-6278 ALABAMA Region
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Bishop Archie Hopkins -1 360 - 607-4764 Washington Region
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Attorney Vicky Currie - 253 588-1955
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Dr. Oshay Smith Business Reference- 1678-925-5803
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Jeff Bridges- Business Reference- 1 414 - 690-0883
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Kim Dunn - Seattle reference - 206 554- 9194
WHAT IS THE POWER OF THE 508 C 1 A ?
508(c)(1)(A) Registration WITH CONSULATION OF LICENSING ORDANING CHURCH PROTOCOLS
RECORDS PRICE PACKAGE IS $1800.00
Articles of Organization
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Certificate of Incorporation
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State Unified Business Number
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SS4 - Tax Identification Number (EIN)
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Certificate of Existence from WA State
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State Commercial Registered Agent Services (filing documents)
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Client Formation Letter
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Expedited Filing Services
Section 508(c)(1)(a) Benefits for Faith Based Organizations (FBO’s) Churches, integrated auxiliaries, and Association of churches do not have to apply as a 501(c)(3) in order to be tax exempt and offer tax deductibility for contributions.
All organizations seeking tax exempt status must apply to the IRS except FBO’s. FBO’s can be formed under Section 508(c)(1)(a) and enjoy “mandatory exceptions” from these requirements. Section 508(c)(1)(a) was codified in the Internal Revenue Code (IRC) in order to formally establish the right to “free” exercise of religion which had been a tacit standard upon which America was founded and governed since it gained its independence.
A 508(c)(1)(a) is, by the very nature of its creation, a religious, non-profit, tax-exempt organization. Section 508 was part of the legislation passed in the Tax Reform Act of 1969 (H.R. 13270), codified as Public Law 91-172 The intent of our U.S. Congress in passing Section 508(c)(1)(a) was to make sure that important First Amendment religious and speech rights were protected when they overhauled and authorized sweeping new changes to the Tax Code in 1969. The Act included substantial changes in the treatment of private foundations and 501(c)(3) organizations.
The changes included requirements that organizations seeking tax exempt status had to first apply, file a tax return annually, comply with rules and regulations that the IRS may from time to time prescribe, keep records of
income and expenses, and render under oath statements about theorganization.
1-800 378 2654
Churches were specifically excepted from these requirements. According to the U.S. House and U.S. Senate Staff of the Joint Committee on Internal Revenue Taxation, the reason for the new laws was because “Congress
believed that the Internal Revenue Service was handicapped in evaluating and administering the tax laws by the lack of information with respect to many organizations”.
The Joint Committee published the General Explanation to the other members of Congress as source material to explain the Tax Reform Act of 1969 as finally enacted. “Under prior law, an organization was exempt if it met the requirements of the code, whether or not it sought an “exemption certificate” from the Internal Revenue Service.”
In other words, churches were not required to apply to the IRS for approval before the Act.
Following passing, the Act required new exempt organizations to notify the Internal Revenue Service that they are applying for recognition of their section 501(c)(3) exempt status. Congress had to enact a particular rule to specifically exempt churches from these new requirements or the new legislation would be in conflict with the Constitution. Section 508(c)(1)(a) was necessary to formally ensure that government did not unnecessarily
entangle itself with the organization and operation of churches.
FBO’s can be organized and operate under Section 508(c)(1)(a) of the Tax Code the same as they can be organized and operate under any other section of the Tax Code. A 508(c)(1)(a) FBO has a constitutional and legal right to form; therefore, there is no required application to seek approval of tax exempt status.
See The principles of “Free Exercise” are specifically guaranteed in the First Amendment of U.S. Constitution and further codified in 42 U.S.C. § 2000bb, Religious Freedom Restoration Act.
See Public Law 91-172 approved December 22, 1969 by the U.S. House vote 381 to 2, and U.S. Senate 71 to 6, signed by the President December 30, 1969. See reg. section 6033. See reg. section 6033(a)(3). 56 See General
Explanation of the Tax Reform Act of 1969 H.R. 13270, 91st Congress, Public Law 91-172 Prepared by the Staff of the Joint Committee on Internal Revenue Taxation page 55, December 3, 1970 57 Id at 54 58 Id at 55, “These notice requirements do not apply to churches and their integrated auxillaries….to conventions or associations of churches”
A 508(c)(1)(a) FBO tax exemption stems from the First Amendment and is not a government subsidy. Some arguments have been presented supporting speech restrictions on politics and legislation for churches as
necessary so government does not subsidize religion. This viewpoint does not comport by definition and is a well settled matter of case law. The legal definition of “exemption” is “freedom from a duty, liability, or other requirement; an exception”.
The legal definition of a “subsidy” is “a grant, usually made by the government, to any enterprise whose promotion is considered to be in the public interest. Although governments sometimes make direct payments
(such as cash grants), subsidies are usually indirect…”It is clear that 508(c)(1)(a) FBO’s do not receive a government subsidy.
A subsidy occurs when money changes hands between the government and the organization. A subsidy is determined by the government whereas an exemption is not. A subsidy is allocated and monitored by the
government whereas an exemption is not.
Therefore, tax exemption of churches does not amount to subsidizing speech. It is well settled by our U.S. Supreme Court that granting churches tax exemption is not government subsidizing religion. In Waltz v Tax
Commission New York our U.S. Supreme Court made clear granting a tax exemption to churches is not a government subsidy. The court stated, “In analyzing either alternative the questions are whether the involvement is excessive, and whether it is a continuing one calling for official and continuing surveillance leading to an impermissible degree of entanglement”….”
The grant of a tax exemption is not sponsorship since the government does not transfer part of its revenue to churches but simply abstains from demanding that the church support the state”…and, “There is no genuine
nexus between tax exemption and establishment of religion.”
Revisiting the U.S. Supreme Court’s well settled jurisprudence case on content-based tax exemptions is Arkansas Writers’ Project, Inc. v. Ragland. In this case government agencies and officials who pick and choose some
organizations to receive tax exemption and others not based on the content of their speech was ruled unconstitutional. In this case the court held that discrimination “on the basis of the content of the message
cannot be tolerated under the First Amendment.”
All donations to a 508(c)(1)(a) FBO’s are tax deductible to donors to the fullest extent of law. Section 170(b) of the IRC states donations are automatically tax deductible to “churches or a convention or association of churches.” A 508(c)(1)(a) FBO has free speech rights.
All 501(c)(3) organizations have speech restrictions. Nowhere in the U.S. Constitution are FBO’s speech and legislative rights restricted. These restrictions come solely from the Tax Code as amended in 1954.
These restrictions apply only to organizations that apply and are approved under the Tax Code. If an organization is not organized as a 501(c)(3), these restrictions do not apply. In fact, there are many different types of non-profits and they do not all have the same restrictions See Blacks Law Dictionary 9th Edition for legal definition of “Subsidy” 61 See Waltz v. Tax Comm’n, 397 U.S. at 397 U.S. 674 (1970) 62 See Arkansas Writers Project, Inc. v. Ragland 481 U.S. 221 (1987)
Id at 221, 230 or benefits. Our government already allows some non-profits tax-exemption when they influence legislation and speak directly on politics.
For example, Congress has established and approved Political Action Committees (PAC’s)64 to be exempt from income tax and allows Veteran’s Organizations65 to be tax exempt and enjoy unlimited lobbying. 508(c)(1)
(a) FBO’s have no annual income tax filing requirement, such as, Form 990.
A 508(c)(1)(a) organization is also not required to keep records, render statements under oath, nor comply with rules and regulations for reporting that the IRS may from time to time prescribe. 66 All non 501(c) (3) FBO organizations are required to file a tax return each year. If they do not file returns timely the organizations tax exemption is automatically revoked after three years.
Section 508(c)(1)(a) organizations, since they are not of record with the IRS, are not exposed to public scrutiny. In the case of Section 501(c)(3) entities, all applications and subsequent correspondence are available to any who request it, including those who are opposed or hostile toward religion.
The Religious Freedom Restoration Act (RFRA) applies to 508(c)(1)(a) organizations as equally as a person. RFRA prohibits Government “from substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability” unless the Government “demonstrates that application of the burden to the person— (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”
U.S.C. §§2000bb–1(a), (b) (emphasis added). FBO’s are unique because furthering their religious “autonomy … often furthers individual religious freedom as well.” (quoting Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U. S. 327, 342 (1987) (Brennan, J., concurring in judgment)). Not only does RRFA apply to nonprofit corporations, but the U.S. also Supreme Court held it applies to for-profit corporations. “RFRA was designed to provide very broad protection for religious liberty. By enacting RFRA, Congress went far beyond what this Court has held is constitutionally required.”
The court held that “Congress provided protection for people like the Hahns and Greens by employing a familiar legal fiction: It included corporations within RFRA’s definition of “persons.” II. Conclusion There remains a heavy price for FBO’s organizing and operating with 501(c)(3) speech restrictions. Churches and church ministries do not have to live in fear of losing their tax-exempt status for speech on leadership, legislation, and politics. Pastors can speak the truth without compromise. People do have a choice in how they form their FBO. What will church and church ministries do to meet the challenges and increased need to speak the truth without fear or compromise and train Godly leaders consistent with their beliefs? Make sure your FBO has a strong and lasting foundation to make a positive and lasting difference. Make sure your FBO is a 508(c)(1)(a).
See reg. section 501(c)(4) 65 See reg. section 501(c)(19) See reg. section 6033(a)(3). See Pension Protection Act of 2006, Public Law 109-280 68 See reg. section 6104. See Burwell v. Hobby Lobby, 573 U.S. (2014). As discussed, n. 3, supra, in City of Boerne we stated that RFRA, by imposing a least restrictive-means test, went beyond what was required by our pre- Smith decisions. 70 Id 501(c)(18) Employee Funded Pension Trust (created before 25 June 1959)
What are the advantages of a 508c1A?
In the past the church, or Faith-Based Organization, was seen as the source of moral and religious standards and had a great influence on the shaping of the culture in the United States. The Founding Fathers who wrote the Constitution believed this so emphatically they placed in the First Amendment the freedom of speech, religion, press, assembly and citizens the ability to petition the government if they did something that blocked any of these freedoms. The church has the greatest opportunity to again make an impact on American society through the 508c1A designation. Each donor, each kingdom steward will be very blessed as
well.
What are some of the 508c1A benefits compared to a 501c3?
Having listed the benefits, advantages and disadvantages, it becomes clear that the 508c1A is the best option for a church, ministry or FBO to form under for their organization. This allows for true freedom as a church or faith-based organization compared to the traditional 501c3 with its reporting and permission-based requirements. Even if you are researching what are the pros and cons of 501c3 for churches and ministries or are asking does a ministry have to be a 501c3, this information will help you.
There are several benefits that the 508c1A nonprofit designation holds over the 501c3 nonprofit designation. The following is a listing of some of those benefits.
1. Filing an application to become a 508c1A non-profit with the IRS is not required. There is no requirement to file Form 1023, which is required to become a 501c3. This eliminates the need for IRS approval of your application.
2. There is no annual income tax filing requirements, such as the required Form 990 salary disclosure as a 501c3, when you are a 508c1A.
3. The church or ministry does not have any restrictions on speaking about politics as a 508c1A, unlike the restrictions under a 501c3.
4. A 508c1A financial records and Board meeting minutes are not subject to public scrutiny, unlike the 501c3 that is required to file their records with the IRS for the purpose of public scrutiny. The advantages of being
508(c)(1)(A) FBO include rights guaranteed under Federal Law 26 U.S.C. § 6033(a)(3(a):
1. Tax Exempt, and can give tax deductible receipts for donations.
2. Freedom of Speech, including, but not limited to, politics, referendums,
initiatives, and candidates.
3. Exception from Federal reporting (does not file a tax return).
4. Exception from “rendering under oath such statements, make such other returns, and comply with such rules and regulations as Secretary (IRS) may from time to time prescribe”.
5. Not subject to public scrutiny due to the non-reporting requirements
required by the 501c3 status.
6. Not required to file for non-profit status with the IRS.
7. Simplified filing process.
8. The Founding Members cannot be removed from the Board of Directors.
501(c)(19) Post or Organization of Past or Present Members of the Armed Forces
501(c)(20) Group Legal Services Plan Organizations[b]
501(c)(21) Black Lung Benefit Trusts
501(c)(22) Withdrawal Liability Payment Fund
501(c)(23) Veterans Organizations[c]
501(c)(24) Section 4049 ERISA Trusts[d]
501(c)(25) Real Property Title-Holding Corporations or Trusts with Multiple
Parents[8]
501(c)(26) State-Sponsored Organization Providing Health Coverage for
High-Risk Individuals
501(c)(27) State-Sponsored Workers' Compensation Reinsurance
Organization
501(c)(28) National Railroad Retirement Investment Trust
501(c)(29) Qualified Nonprofit Health Insurance Issuers[e]

